NBP data: Inflation net of food and energy prices in April 2013 stood at 1.1 % y/y and was by 0.1 p.p. higher than in March. Also inflation measure excluding the most volatile prices picked up.

The National Bank of Poland release on core inflation posted on 16 May 2013 shows that at the end of April 2013 two out of four core inflation measures increased, one remained unchanged and one declined in year-on-year terms. Thus:

inflation excluding administered (state-controlled) prices stood at 0.7% as compared to the same level of 0.7% in March and 1.0% in February 2013;

inflation excluding the most volatile prices amounted to 1.6% as compared to 1.5% in March and 1.7% in February;

inflation net of food and energy prices amounted to 1.1% as compared to 1.0% in March and 1.1% in February;

the so-called 15% trimmed mean (excluding the impact of 15% of the price basket featuring the highest and lowest growth rates) stood at 1.2% as against 1.3% in March and 1.6% in February.

The CPI (consumer inflation) index as calculated by the Central Statistical Office (GUS) – announced the day before – stood in April at 0.8% (y/y) as compared to 1.0% in March and 1.3% in February.

The National Bank of Poland computes the four core inflation measures on a monthly basis, which helps to understand the nature of inflation developments in Poland. The CPI shows the average movement in prices across the whole broad basket of consumer goods; by calculating core inflation indices, we can address price changes in various segments of this basket. Thus, sources of inflation can be identified more precisely and future trends forecast more accurately. Furthermore, it can be determined to what degree the observed inflation trend is a lasting phenomenon, and to what extent it is driven by e.g. short-lived price hikes triggered by unpredictable factors. The core inflation measure most frequently used by analysts is inflation net of food and energy prices. It captures movements in prices which are fairly responsive to the central bank's monetary policy. On the other hand, energy prices (including those of fuels) are not set domestically, but determined in the global markets, sometimes as a result of speculation. Also food prices are largely dependent on, among other things, the weather and conditions prevailing in the domestic and global agricultural market.

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